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Disorganization and Changing Your Mind are Both Expensive

Ron DuPlain forwarded me an interesting post from November 2008 (via @duanegran, I believe) called How much do websites cost? It’s a great comprehensive overview of the different kinds of web sites that can be built – the spectrum of customization, interactivity, and intent that dictate whether a web site will cost $200 or $2 million. But what really struck me about this article was one tiny little section that talks about value, emphasizing the relationship between quality, waste, and the changeability of human wants, needs, and desires:

2.) A small company site that has 5 to 10 pages describing the products/services offered by the company. $500 to $2,000 depending on how prepared you are, and also on how clear in your own head you are about what you want. Disorganization and changing your mind are both expensive.

Disorganization is expensive because it blocks action. When your house is disorganized, you waste time and energy trying to find stuff. When the processes you use in the workplace are disorganized, time and physical energy can be wasted engaging in non-value-adding activities, and mental and emotional time and energy wasted in unproductive communications. Wasting time and energy can generate short-term real costs (for example, moving parts or products around a factory or supply chain can delay time-to-market while costing more in fuel for transport), long-term real costs (e.g. reinforcing negative behaviors that lead to breakdowns in interpersonal relationships, teamwork, or morale) or opportunity costs.

Changing your mind is expensive for the same reason: it either blocks new action from taking place, or it eliminates the value that could have been added by prior work. A task is not actionable unless you have the 1) resources to do the job, 2) the information and interest to complete it, 3) the skills and capabilities to make it happen, as well as a clear idea of what needs to be done, and 4) an execution environment that supports getting things done. Changing your mind can erode #2 or #3.

To reduce the risk associated with development, and to control the costs of the project, find out:

What parts do you have the resources, information/interest, capabilities/skills/clarity, and execution environment to get done now? (I call this RICE to make it easier to remember)

The lesson: to get higher quality and lower costs (that is, greater value), focus on those parts of a project that are least likely to change and do those first. This is, of course, if you have the luxury to be agile (highly regulated environments may impose restrictions or limits). Then stop – figure out what your experience working on those parts tells you about how you can approach the problem more systematically and effectively– and repeat the cycle until you iterate to the desired solution. This is the essence of applying organizational learning to your day to day tasks.

My pleasure to share this. The thanks really goes to Lawrence for the work he put into writing such a comprehensive explanation of what goes into pricing a web site.

On the matter of disorganization I wonder what options we have. The cost for everything to be organized is impractical. Possibly the client has other aspects of their business affairs perfectly in order and in balance it is worth paying the designer/developer double because they aren’t paying the CFO double to keep the books in order. In a perfect world every functional area would be orderly but one must prioritize.

I think the answer is to make the client aware of the cost and allow them to prioritize. Ideally we can even be rational about what we leave disorganized.

Duane, what I was thinking about were those entrepreneurs who accidentally burn though $200,000 because they were unsure of what they were going for when they started. Clarity of thought can not be purchased. You can not hire an expert to substitute for your own lack of clarity. However, I am not sure how to convince entrepreneurs of what they do not know. You’ve heard of the 4 levels of competence?

Using that model, I’d say that many of the entrepreneurs I’ve worked with are at the level of unconscious incompetence. They simply do not realize how little they know. Many have had limited business or web experience, yet they assumed their creativity and intelligence would make up for their lacks.

They think they have a clear idea of what they want, but once I start asking detailed questions, there certainty begins to dissolve. And yet, I would be unreasonably conservative if I simply told them not to proceed.

Many of them end up buying themselves an expensive education – they spend $200,000 and at the end of that they know much more about web development than they did before. That’s okay so long as the money wasn’t crucial to their standard of living. That is, they could afford to lose that money. Possibly their next attempt will be more successful. The history of business has a long tradition of the entrepreneur who fails at their first venture but then later succeeds. An example:

John Bayer tried to run a distillery, but he went bankrupt. Then he fell in love with a woman whose father was suffering from severe arthritis, and who therefore was dealing with the pain by drinking large amounts of willow bark tea (at that time, it was the only source of salicylic acid). At dinner one night, the father complained that the bitterness of the tea was burning his mouth and throat. Bayer then decided to run the willow bark tea through his distillery equipment, producing a powder than could be made into a pill and therefore more easily swallowed. This was the beginning of Bayer Aspirin.

Some of the entrepreneurs I’ve worked with might end up like that.

Also, all of us face severe limits of knowledge relative to the future. “Clarity of thought” runs into definite limits when you are running a startup – circumstances arise that could never have been seen ahead of time. Flexibility is needed.

At the moment, my current (but always evolving) ideal for start-up leadership is clarity of thought, informed by experience, and balanced with flexibility, which must also be informed by experience.

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